In the wake of the U.S. Supreme Court’s Hobby Lobby decision, the U.S. Department of Labor has said that “closely held” employers that want to remove birth-control methods from the menu of covered pharmaceuticals in their health plan must formally notify their employees.

Employers will be required to be transparent about their move to remove birth control drugs. In Burwell vs. Hobby Lobby Stores, the U.S. Supreme Court held that family-run companies and other “closely held” corporations may exercise religious beliefs.

That means they cannot be forced into violating those beliefs by having to comply with the Affordable Care Act requirement that all employer health plans provide all Food and Drug Administration-approved contraceptives with no out-of-pocket costs for enrollees.

The case was brought by two Christian families and their businesses. The Greens own Hobby Lobby, a chain of craft shops, and Mardel, a Christian bookstore. The other family, the Hahns, own cabinet-maker Conestoga Wood Specialties.

The Greens and Hahns objected on religious beliefs that their company health plans should have to cover four of the FDA-approved drugs known as “abortifacients,” which can keep a fertilized egg from implanting in the uterine wall. One such drug is the “morning-after pill.”

While the case covered only four forms of birth control, other lawsuits challenging requirements to cover all forms of birth control are still pending in court.

Under the new rule, announced by the Department of Labor on its ACA frequently asked questions page, employers will have up to 60 days to tell employees after making such a change.

If an employer-sponsored medical plan excludes all or a subset of contraceptive services from coverage, the DOL says that the plan’s summary plan description “must describe the extent of the limitation or exclusion of coverage.”

This jibes with the DOL’s current regulation that the summary plan description shall include a description of the extent to which preventive services (which includes contraceptive services) are covered under the plan.

The department makes special note that while its rules are federal regulations, states may have in place their own regulations and laws concerning health plans’ moves to exclude contraceptives.

For plans that reduce or eliminate coverage of contraceptive services after having provided such coverage, expedited disclosure requirements for material reductions in covered services or benefits apply. See ERISA section 104(b)(1) and 29 CFR 2520.104b-3(d)(1), which generally require disclosure not later than 60 days after the date of adoption of a modification or change to the plan that is a material reduction in covered services or benefits.

Other disclosure requirements may apply, for example, under state insurance law applicable to health insurance issuers.

Keith McMurdy, a labor and employment lawyer and partner with the national law firm Fox Rothschild, wrote in his blog after the rule change:

“I am not suggesting companies immediately take this step. But a couple of things about this FAQ that are worth noting if a plan sponsor is considering eliminating contraceptive coverage.

“One, the question references a ‘closely held for-profit company’ which pretty clearly indicates that the DOL is applying a very narrow reading of the Court’s decision and non-closely held companies would be in for a fight later.

“Second, if the company is eliminating contraceptive coverage, it has to follow the ACA and ERISA notice requirements for plan changes. The change is not immediate and can only be completed after the appropriate notification time periods. Simply eliminating the coverage will not do.”

The announcement of the new rule shows how court decisions may continue to affect the ACA in the future, and that employers need to stay on top of a law that will likely continue to evolve.

We will continue to keep you informed in this newsletter of any new guidance that is issued by the various government bodies that regulate the ACA.